OREA Contract Law for Real Estate 2

Question 1

In Ontario real estate, what is a 'condition precedent' in an Agreement of Purchase and Sale?

Accepted Answer

A condition that must be satisfied before the contract becomes binding, such as obtaining financing or a satisfactory home inspection

Answer

A condition precedent is a clause that must be fulfilled before the contract becomes firm and binding. Common conditions include financing approval, satisfactory home inspection, and sale of the buyer's existing home. If the condition is not met, the buyer can usually walk away.

Question 2

What is a 'waiver' in the context of conditions in an Ontario Agreement of Purchase and Sale?

Accepted Answer

The voluntary relinquishment of a condition by the party for whose benefit the condition was inserted

Answer

A waiver occurs when the party benefiting from a condition voluntarily gives up the right to that condition, making the contract firm and binding without that condition being fulfilled. For example, a buyer might waive a financing condition if they secure funds from another source.

Question 3

Under Ontario law, what remedies are available to a buyer if the seller breaches an Agreement of Purchase and Sale?

Accepted Answer

Specific performance, monetary damages, rescission, or a combination depending on the circumstances

Answer

When a seller breaches the agreement, the buyer may seek specific performance (forcing the sale), monetary damages (compensation for losses), rescission (canceling the contract and returning the parties to their original positions), or a combination of remedies.

Question 4

In Ontario, what is an 'amendment' to an Agreement of Purchase and Sale?

Accepted Answer

A written change to the terms of an existing agreement, agreed to by all parties

Answer

An amendment is a written document that modifies specific terms of an existing Agreement of Purchase and Sale. It must be agreed to and signed by all parties. The amendment becomes part of the original agreement and is enforceable.

Question 5

What is 'tender' in Ontario real estate contract law?

Accepted Answer

The unconditional offer to perform one's obligations under the contract, typically by being ready, willing, and able to close on the closing date

Answer

Tender means presenting oneself as ready, willing, and able to complete the transaction on the closing date. If one party tenders and the other fails to close, the tendering party can pursue legal remedies for breach of contract.

Ontario Real Estate Practice Test

Ontario Real Estate Practice Test

OREA Contract Law for Real Estate 2